Douglas J. Cumming The Robert W. Kolb Series in Finance John Wiley & Sons, Inc.

Transcription

1 VENTURE CAPITAL

2 The Robert W. Kolb Series in Finance provides a comprehensive view of the field of finance in all of its variety and complexity. The series is projected to include approximately 65 volumes covering all major topics and specializations in finance, ranging from investments, to corporate finance, to financial institutions. Each volume in the Kolb Series in Finance consists of new articles especially written for the volume. Each Kolb Series volume is edited by a specialist in a particular area of finance, who develops the volume outline and commissions articles by the world s experts in that particular field of finance. Each volume includes an editor s introduction and approximately 30 articles to fully describe the current state of financial research and practice in a particular area of finance. The essays in each volume are intended for practicing finance professionals, graduate students, and advanced undergraduate students. The goal of each volume is to encapsulate the current state of knowledge in a particular area of finance so that the reader can quickly achieve a mastery of that special area of finance.

3 VENTURE CAPITAL Investment Strategies, Structures, and Policies Douglas J. Cumming The Robert W. Kolb Series in Finance John Wiley & Sons, Inc.

4 Copyright c 2010 by John Wiley & Sons, Inc. All rights reserved. Published by John Wiley & Sons, Inc., Hoboken, New Jersey. Published simultaneously in Canada. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, (978) , fax (978) , or on the Web at Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, (201) , fax (201) , or online at Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with respect to the accuracy or completeness of the contents of this book and specifically disclaim any implied warranties of merchantability or fitness for a particular purpose. No warranty may be created or extended by sales representatives or written sales materials. The advice and strategies contained herein may not be suitable for your situation. You should consult with a professional where appropriate. Neither the publisher nor author shall be liable for any loss of profit or any other commercial damages, including but not limited to special, incidental, consequential, or other damages. For general information on our other products and services or for technical support, please contact our Customer Care Department within the United States at (800) , outside the United States at (317) or fax (317) Wiley also publishes its books in a variety of electronic formats. Some content that appears in print may not be available in electronic formats. For more information about Wiley products, visit our Web site at Library of Congress Cataloging-in-Publication Data: Venture capital : investment strategies, structures, and policies / Douglas J. Cumming, editor. p. cm. (The Robert W. Kolb series in finance) Includes bibliographical references and index. ISBN (cloth) 1. Venture capital. I. Cumming, Douglas. HG4751.V dc Printed in the United States of America

5 Contents 1 Introduction to the Companion to Venture Capital 1 Douglas Cumming PART I Alternative Forms of Venture Capital 7 2 Venture Capitalists Decision Making: An Information Processing Perspective 9 Andrew Zacharakis 3 Banks Versus Venture Capital in the Financing of New Ventures 31 Jean Etienne de Bettignies 4 Corporate Venture Capital 51 Vladimir I. Ivanov and Fei Xie 5 Angel Finance: The Other Venture Capital 71 Andrew Wong 6 Business Incubation and Its Connection to Venture Capital 111 Darek Klonowski 7 Philanthropic Venture Capital: A New Model of Financing for Social Entrepreneurs 131 Luisa Alemany and Mariarosa Scarlata PART II The Structure of Venture Capital Investments Financial Contracts and Venture Capitalists Value-Added 153 Catherine Casamatta v

6 vi Contents 9 Venture Capitalists, Monitoring and Advising 169 Roberta Dessi 10 Project Externalities and Moral Hazard 191 Dima Leshchinskii 11 Doing It Not Alone: Antecedents, Dynamics, and Outcomes of Venture Capital Syndication 221 Dirk De Clercq and Dimo Dimov PART III Venture Capital Value-Added and Conflicts Time to Grow Up: Large Sample Evidence on the Maturation Dynamics of Private Venture-Backed Firms 245 John R. M. Hand 13 How Do Venture Capitalists Create Value for Entrepreneurial Firms? A Review of the Literature 277 Thomas J. Chemmanur, Karthik Krishnan, and Debarshi Nandy 14 Venture Capital and Innovation 299 Masako Ueda 15 Reputation in Financial Intermediation: Evidence from Venture Capital 319 Rajarishi Nahata 16 Investor Opportunism, and Governance in Venture Capital 347 Brian Broughman 17 Conflicts of Interest and Litigation in the Venture Capital Industry 365 Vladimir Atanasov PART IV Venture Capital Exits and Returns Venture Capital Exits 389 Armin Schwienbacher 19 Returns to Venture Capital 407 Mike Wright and Riya Chopraa

7 CONTENTS vii 20 Venture Capitalists Control: Stimulating or Stunting? 439 April Knill PART V International Venture Capital and Public Policy Cross-Border Venture Capital and Private Equity 473 Markku V. J. Maula 22 The Canadian Public Venture Capital Market 501 Cécile Carpentier and Jean-Marc Suret 23 Public Policy, Venture Capital, and Entrepreneurial Finance 525 Christian Keuschnigg 24 Twelve Meditations on Venture Capital 553 Gordon Murray and David Lingelbach Index 585